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The Daily Buzz: Searching for Genuine Value in the Cannabis Patch (CBWTF, GTBIF, CWBHF)

Auxly Cannabis Group Inc (OTCMKTS:CBWTF) has become a first-tier story in the Canadian pot space, after being an also-rand for quite a few years. The latest suggesting of this new status, besides the action on the charts, is the company’s announcement this week that its wholly-owned subsidiaries, Dosecann Inc. and Kolab Project Inc. have both been authorized by Health Canada to sell cannabis oil under the Cannabis Regulations.

According to the release, “The issuance of these sales licences marks a significant milestone for Auxly in furthering its strategy to deliver branded derivative cannabis products to market when such products become legal later this year. The licences enable each of Dosecann and Kolab to commence initial sales of cannabis oil products to provincial and territorial purchasers; through Kolab’s flagship retail store in Saskatchewan; and to registered medical patients across the country through Kolab’s online portal at kolabproject.com.”

Auxly Cannabis Group Inc (OTCMKTS:CBWTF) an international cannabis company dedicated to bringing innovative, effective, and high-quality cannabis products to the medical, wellness and adult-use markets.

Auxly’s experienced team of industry first-movers and enterprising visionaries has secured a diversified supply of raw cannabis, strong clinical, scientific and operating capabilities and leading product research and development infrastructure in order to create trusted products and brands in an expanding global market.

And the stock has been acting well over recent days, up something like 11% in that time. Shares of the stock have powered higher over the past month, rallying roughly 13% in that time on strong overall action.

Auxly Cannabis Group Inc (OTCMKTS:CBWTF) managed to rope in revenues totaling $2.8M in overall sales during the company’s most recently reported quarterly financial data. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($119.5M against $122.4M, respectively).

 

Green Thumb Industries Inc (OTCMKTS:GTBIF) is something like a value play for the cannabis space as we see it. Its Q2 results, just posted a few days ago, highlight the important trends to watch.

The company manufactures and sells various cannabis products in the United States. Its cannabis products include flower, concentrates for dabbing and vaporizing, edibles, and topicals. The company markets its products through third-party retailers. It also owns and operates a chain of 50 retail stores under the RISE dispensaries name. The company was founded in 2014 and is headquartered in Chicago, Illinois.

According to a recent release, Q2 revenue increased 228% year-over-year to $44.7 million. In addition, sequential quarterly revenue increased 60%, which was a new company record. Revenue growth was driven by organic growth across the company’s consumer products and retail businesses, strategic acquisitions and increased store traffic. The release also noted that gross margins before biological adjustments for the quarter improved to 52% from 46% in the prior year and from 47% in the prior quarter due to increased operating efficiencies as the business continues to scale.

“We are pleased to report another solid quarter of positive yet disciplined momentum with record revenue and positive adjusted operating EBITDA as our strategic plan delivers on operating efficiencies from scale. Continued execution of key priorities such as the closing of Integral Associates, accelerated store openings, and expanded distribution of our brand portfolio sets us up well for the future,” said GTI Founder and Chief Executive Officer Ben Kovler.

“We are deep in the chapter of maximizing the levers in our business to drive long-term operational performance that delivers value for our shareholders and the communities in which we operate,” Kovler continued. “We are focused on optimizing our wholesale and retail businesses, integrating our acquisitions, and further strengthening compliance across the organization. We are pleased to see many of these efforts already bearing fruit as we head into the second half of 2019 and I want to thank our team for all of their hard work.”

The company now has about $117M in cash balanced by roughly $83M in total current liabilities. The topline is exploding right now as well, with $114M in trailing twelve-month revenues on 228% growth on a quarterly y/y basis.

 

Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) has been one of the most actively traded stocks on the OTC over the past few months. This is the pure play in the CBD space, and traders have gravitated to its strongly liquid tape and wide swings.

To add some further color to the story, the company recently announced that Russell Hammer has joined the Company as Chief Financial Officer, effective tomorrow, August 15, 2019.

According to the release, “Mr. Hammer, who has most recently served as an advisor in private equity investments, brings more than 30 years of finance experience in the retail, tourism and technology sectors. With his experience leading multi-billion-dollar multinational companies, he is the latest top-tier executive to join Charlotte’s Web as the Company accelerates its growth and evolution into a global consumer packaged goods (“CPG”) brand. Mr. Hammer replaces Rich Mohr, who as CFO has overseen the Company’s successful transition to a publicly traded company and market leader in hemp CBD products.”

Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) develops and distributes hemp-based cannabidiol (CBD) wellness products. Its products include CBD hemp oils, capsules, topicals, and pet products that feature CBD hemp oil extracts. The company sells its products online as well as through distributors, and brick and mortar retailers.

The company pulled in sales of $33.5M in its last reported quarterly financials, representing top line growth of 50.6%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($67.2M against $18.3M).

As it continues to consolidate, this is a stock to keep actively on the radar.

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